Southwestern Energy (SWN) Stock Down on Falling Oil Prices

Southwestern Energy (SWN) stock is declining in midday trading on Wednesday amid decreasing oil prices.
By Amanda Albright ,

NEW YORK (TheStreet) -- SouthwesternEnergy  (SWN) - Get Report  stock is plunging 4.21% to $10.47 in midday trading on Wednesday, as oil prices slip below $40 per barrel for the first time since August.

Oil prices are falling as the global supply glut continues to pressure prices, despite an Energy Information Administration report today that showed a slower-than-expected increase in U.S. crude inventories, Reuters reports. 

Crude inventories increased by 252,000 barrels last week, compared with analysts' expectations for an increase of 1.9 million barrels, Reuters reports.

"It's a bullish signal for macro traders," Virendra Chauhan, analyst at Energy Aspects, told Reuters. "But if you look beyond the day-to-day, the fundamentals are bearish. There's talk of floating storage and if you look at differentials for physical oil in the North Sea, for Urals and for West Africa they are very low."

Crude oil (WTI) is down by 1.40% to $40.10 per barrel and Brent crude is down 0.21% to $43.48 per barrel this afternoon, according to the CNBC.com index.

Southwestern Energy is an E&P company based in Spring, TX.

Separately, TheStreet Ratings team rates SOUTHWESTERN ENERGY CO as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

We rate SOUTHWESTERN ENERGY CO (SWN) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 924.2% when compared to the same quarter one year ago, falling from $211.00 million to -$1,739.00 million.
  • The debt-to-equity ratio of 1.05 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with this, the company manages to maintain a quick ratio of 0.47, which clearly demonstrates the inability to cover short-term cash needs.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, SOUTHWESTERN ENERGY CO's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to $287.00 million or 50.51% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 70.07%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 870.00% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • You can view the full analysis from the report here: SWN

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.

Loading ...